State Cult and Popular Religiosity
According to Confucianism, the worship of great deities was the affair of the state, ancestral worship is required of all, and a multitude of popular cults are tolerable. Confucianism tolerated magic and mysticism as long as they were useful tools for controlling the masses; it denounced them as heresy and suppressed them when they threatened the established order (hence the opposition to Buddhism). Another notable quality was the avoidance or both irrational ecstasy and excitement, as well as mystic contemplation and metaphysical speculation.
Note that in this context Confucianism can be referred to as the state cult, and Taoism as the popular religion.
Read more about this topic: The Religion Of China: Confucianism And Taoism
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